Wednesday, 1 February 2012

Ontario Court Finds Broker Failed to Properly Offer SABS Optional Coverage

The Ontario Superior Court has dismissed a plaintiff’s action against a broker, claiming the broker did not ‘properly’ offer him the chance to purchase optional income replacement benefits.

In Zefferino v. Meloche Monnex Insurance, the plaintiff was injured on a May 27, 2005 in a motor vehicle accident. The plaintiff had purchased standard coverage including income replacement benefits to a maximum of $400 per week.

The plaintiff alleged that the insurer failed to offer optional income replacement benefits which, if they had been offered, the plaintiff would have purchased. His income at the time of the accident would have qualified him for income replacement benefits of $1,000 per week.

The defendant claimed that their practices were consistent with industry practices which was to mention the availability and only follow up if the consumer showed some interest.  The judge found that the broker’s conduct fell below the required standard of care required of a seller of insurance as set out in the SABS.

However, the judge dismissed that action because the judge was not convinced that the plaintiff would  have purchased the optional benefits had they been properly offered. The plaintiff and his spouse purchased insurance from four other insurance companies during the ten years and never purchased more that the standard accident benefits coverage.

This case has some significance in light of the reforms introduced in Ontario on September 1, 2010.  With the reduction of standard accident benefits coverage and the expanded  optional coverage, brokers, agents and direct writers are vulnerable to similar actions if their practices fall below the standard of care expected. 

 Zefferino v. Meloche Monnex Insurance, 2012 ONSC 154

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